About the Supreme Court's Decision
Pursuant to the U.S. Supreme Court’s 1992 decision in Quill Corp. v. North Dakota, sellers without a physical presence in a state were not required to collect and remit sales tax to that particular state. On June 21, 2018, the Court issued its ruling in South Dakota v. Wayfair, Inc., overturning its prior decision in Quill, such that physical presence is no longer required for sellers to be obligated to collect and remit sales taxes.
On June 21, Indiana Gov. Eric J. Holcomb offered the following statement regarding the Wayfair decision:
“A lot about our world and economy has changed in the 26 years since our nation’s highest court last ruled on this issue. With the incredible evolution of technologies and the growth of internet sales, this Supreme Court ruling will help level the playing field between our Hoosier-based companies that operate retail stores and out-of-state companies that sell products and services online in our state. We’re taking a careful look at the ruling to better understand its implications for Indiana.”
As the Indiana Department of Revenue (DOR) analyzes the contents of the Court’s decision, see our Frequently Asked Questions to better understand how current Indiana laws and filing requirements apply to you. DOR is committed to being transparent in working with the business community to implement this historic decision.
- U.S. Supreme Court’s decision in South Dakota v. Wayfair
- More about Indiana sales tax
- Additional information:
Frequently Asked Questions
Note: As we review the U.S. Supreme Court’s decision in South Dakota v. Wayfair, we will be providing frequent updates. Please check back frequently for updated FAQs and guidance to help you understand how Indiana’s laws and filing requirements apply to you. DOR began enforcing Indiana’s economic nexus law on October 1, 2018. That said, any merchant may voluntarily register and remit sales tax to Indiana.
Indiana law (IC 6-2.5-2-1(c)) requires a seller without a physical location in Indiana to obtain a registered retail merchant’s certificate, collect and remit applicable sales tax if the seller meets either or both of the following conditions in the previous calendar year or the current calendar year:
- Gross revenue from sales into Indiana exceeding $100,000, including sales that are not subject to sales tax or are considered tax exempt; or
- 200 or more separate transactions into Indiana.
Sales into Indiana or sales transactions include any combination of sales of tangible personal property delivered into Indiana, products transferred electronically into Indiana and services delivered in Indiana.
- What is a remote seller?
A remote seller is a business or person who sells into a state where it does not have a physical presence.
- What has changed for remote sellers?
On June 21, 2018, in the matter of South Dakota v. Wayfair, the U.S. Supreme Court overturned the 1992 case of Quill v. North Dakota. The Court specifically ruled in Wayfair that sellers who do not have a physical presence within a state can be required to collect and remit sales taxes in states where they meet certain economic thresholds.
- What is the law in Indiana?
On August 27, 2018, the lawsuit challenging the constitutionality of HEA 1129 was resolved and the Department was authorized to enforce Indiana’s economic nexus law starting October 1, 2018.
- What is the current status of the law in Indiana?
On August 27, 2018, the declaratory judgment action challenging HEA 1129 (2017) was resolved and DOR was authorized to enforce Indiana’s economic nexus law starting October 1, 2018.
- Is this applied retroactively? “I have been selling products into Indiana for a while now. Do I have to remit tax for sales prior to October 1, 2018?”
DOR began enforcing Indiana’s economic nexus law on October 1, 2018. Sellers that do not have physical presence in Indiana are not responsible for collecting and remitting tax on sales prior to that date. However, purchasers still have a use tax obligation on all such sales including those prior to October 1st.
If you have already met the economic nexus threshold as of October 1, 2018, or you met it at any point during calendar year 2017, you must immediately begin collecting and remitting sales tax on sales into Indiana. If you have not yet met the threshold, you will be required to collect and remit sales tax immediately upon reaching the threshold.
- How do I register?
Note: A remote seller will generally not be required to register with the Indiana Secretary of State. Refer to the information on the INBiz portal and the Indiana Secretary of State’s website for more information.
- Should I register to collect sales tax or out-of-state use tax?
HEA 1129 (2017) specifies that qualifying remote sellers should register to collect sales tax. Any use tax accrued or collected by the seller can be remitted utilizing their sales tax registration without the need for a separate use tax registration.
Note: that any additional seller locations, whether located within or outside of Indiana, will be required to register as additional locations under the sellers Taxpayer Identification Number (TID).
- What is the Streamlined Sales Tax Registration System (SSTRS)?
The SSTRS is a quick and easy way to register for a sales tax account in all Streamlined Sales Tax member states. When you register through the SSTRS, you receive sales tax accounts to collect and remit sales tax in all Streamlined Sales Tax full member states. You may also choose to register in any associate member states. Once you are registered, you must collect and remit sales and use taxes in those states.
- Can I register today?
- Many news articles make reference to states providing free software to vendors. Is this correct?
DOR does not provide sales tax compliance software. The software provided by states which is referred to in the Wayfair decision and news articles is provided to qualified taxpayers that register through the Streamlined Sales and Use Tax Registration system. The qualifications and requirements to qualify for those services and software can be found at the Streamlined Sales Tax website.
- What is a Certified Service Provider (CSP)?
A CSP is an agent certified under the Streamlined Sales and Use Tax Agreement to perform all of the seller's sales and use tax functions, other than the seller's obligation to remit tax on its own purchases. A CSP is designed to allow a business to outsource most of its sales tax administration responsibilities. See more information.
- If I have already collected sales tax, what do I need to do?
If you have collected sales tax on an Indiana sale, you must remit the sales tax to DOR. If you are not already registered, please see the “How do I Register?” question above. Failure to remit can potentially subject you to civil and criminal penalties.
- Which of my sales are taxable in Indiana? Indiana imposes a sales tax on the sale of most goods and tangible personal property.
- See list of taxable sales for Indiana or all states
- Review the Sales Tax Information Bulletins on particular types of transactions
- See sales tax information or call 317-233-4015
- What are the documentation requirements regarding exempt sales made by a remote seller?
A remote seller will be required to adhere to the same requirements as all other Indiana registered retail merchants. This means that the remote seller will be required to obtain either an Indiana (ST-105) or a Streamlined Sales Tax Agreement certificate of exemption from the customer.
- What if I meet Indiana’s threshold, but I don’t make any taxable sales in Indiana?
The threshold applies regardless of whether any of the 200 transactions would have been subject to Indiana sales or use tax or whether any of the $100,000 of revenue was generated by taxable sales. Wholesalers are considered to be retail merchants pursuant to Ind. Code 6-2.5-4-2. Thus, a remote vendor will still be required to register and file returns even if it believes that none of its sales will be subject to Indiana sales or use tax. Note that a retail merchant with annual collections of less than $1,000 will only be required to file a return annually.
HEA 1129 (2017) includes revenue from “service[s] delivered in Indiana.” Pursuant to Ind. Code 6-2.5-13-1, a service is sourced to Indiana if it is first used in Indiana. Indiana does not generally impose sales tax on services. Therefore, a service provider that meets either component of Indiana’s economic nexus threshold, but does not sell tangible personal property or provide taxable services to Indiana residents will not be required to register.
- I don’t have a physical presence in Indiana, do I have to register?
If you sell goods or tangible personal property into Indiana, you will be required to be registered if you meet Indiana’s sales threshold of 200 or more separate transactions or receive gross revenue from sales of more than $100,000 into Indiana in the current calendar year or the preceding calendar year.
- I make sales through my own website; do I need to collect tax?
If you are located in Indiana or have a physical presence in Indiana, you must collect and remit sales tax. If you don’t have a physical presence in Indiana, but you sell goods or tangible personal property into Indiana, you will be required to collect tax if you meet Indiana’s sales thresholds of 200 or more separate transactions or earn a gross revenue from sales of more than $100,000 into Indiana in the current calendar year or the preceding calendar year.
- What is Indiana’s current sales tax rate?
Indiana’s sales tax rate is 7 percent.
- How do I file and remit the sales tax to Indiana?
If you register through the Streamlined Sales Tax Registration System, you can file returns and make payments through a Certified Service Provider (CSP) or using a Certified Automated System (CAS). This will allow you to file for multiple states at one time. If you register as a retail merchant with Indiana only, you are required to file and pay electronically using Indiana’s online portal.
- What if I am an Indiana business that makes sales into other states?
Many states have adopted provisions similar to those in HEA 1129 (2017). Those provisions may differ somewhat from those enacted by Indiana and they may have different effective dates. Please refer to the Streamlined Sales Tax website for information regarding the remote seller rules in other states.
For example: Jeff owns a T-shirt store in Indianapolis. He also sells T-shirts from that Indianapolis location through a website. Jeff should already be collecting Indiana sales tax on any T-shirt sales made at the Indianapolis store or sales to Indiana residents through the website. The Indiana remote seller provisions have no impact on Jeff’s business. He should not collect Indiana sales tax on any sales to customers located outside of Indiana. Since many other states have enacted provisions similar to Indiana, Jeff should determine whether he is required to collect any other states’ sales taxes on sales made to residents those states.
- Can I voluntarily register to collect Indiana sales tax even if I do not meet Indiana’s threshold?
Yes. An out of state vendor may voluntarily register to collect Indiana sales tax even if they do not have a physical presence in Indiana or meet either of the economic nexus thresholds. Once an out of state vendor registers to collect Indiana sales tax they are obligated to collect and remit Indiana sales tax on all taxable sales until such time as they cancel their registration and file all required returns.
- Do the remote seller requirements apply to non-U.S. sellers?
- Will registering for Indiana sales tax obligate a remote seller to file and pay any other taxes or result in the seller receiving a nexus questionnaire to determine whether the seller has any other Indiana tax obligations?
HEA 1129 (2017) only applies to Indiana sales tax. DOR does not automatically send out questionnaires or similar inquires to taxpayers that register to collect Indiana sales or use taxes. HEA 1129 (2017) did not obligate DOR to begin doing so. Such inquires will continue to be initiated based on facts and circumstances.
- What is the effective date of the law in Indiana following the Supreme Court's ruling?
HEA 1129 (2017) is effective as of July 1, 2017, but DOR was prohibited from enforcing the obligation of remote sellers to collect and remit sales tax until the legal challenges to the law were resolved in court.
On August 27, 2018, the lawsuit challenging HEA 1129 was resolved and the Department was authorized to begin enforcing Indiana’s economic nexus law on October 1, 2018. Pursuant to the prohibition under HEA 1129 (2017) against enforcing retroactively, DOR will not enforce the law prior to October 1, 2018.
That said, any merchant may voluntarily register and remit sales tax to Indiana prior to October 1, 2018.
- How does HEA 1129 (2017) impact remote sellers that utilize an online marketplace facilitator?
HEA 1129 (2017) did not include any provisions directly impacting marketplace facilitators. The threshold applies to a remote seller that utilizes a marketplace facilitator assuming the remote seller is legally making sales to Indiana customers, i.e., the facilitator is not buying the goods from the remote seller and then reselling them to Indiana customers.